Thursday, June 18, 2009

I am a fundamentally conservative person. I do not advocate change for the sake of change, and I am the bane of engineers who propose radical changes to our product or who have expansive plans for its functionality, demanding that they show me the benefit that will come from incurring those costs in terms of instability and lost opportunities for including more market-worthy features. While the fact that I prefer to work for small startups might make it seem like I undertake risk for the sake of risk, the reality is that I have decided notions of what good software looks like -- it is designed coherently, with provisions for future growth, it is simple but provides sufficient functionality to succeed in the marketplace, it is written in a manner that properly models the problem set with its components and objects, etc. -- and it is easier for me to achieve those objectives as a big fish in a small pond than as a smaller fish in a bigger pond. In short, my conservative desire for clean and functional solutions that don't take any big risks in terms of engineering outweigh the risks of working for less financially secure companies.

If you read the economics posts on my blog you will notice that none of them advocate a major change in the way that the U.S. economy fundamentally operates. Indeed, I strongly defend capitalism in a number of places as the best mechanism for creation of wealth and the best way (if properly regulated) to increase the overall welfare of the people as a whole. This should not be surprising, though. This is a fundamentally conservative way of looking at the economy. FDR instituted a mixed but fundamentally capitalist economy during the 1930's that functioned extremely well from 1945 to 1980 until it started being dismantled by Reagan and his successors. During those 35 years our nation became the greatest on the planet, going to the moon, building fleets of gigantic bombers, and otherwise doing grand and wonderful things. In 1945 most rural homes did not have running water and relied on outhouses for sanitation. By 1980, homes without running water or modern sanitation were almost unknown outside of small hidden pockets out of sight of public health officials. That wasn't done by socialism. That was done by capitalism -- by a properly regulated capitalist system raising the wealth of all Americans. A conservative does not dismantle something that actually works, he only fiddles around the margins. A radical dismantles something that actually works, but a radical is not a conservative, even if he calls himself one.

So anyhow, let's talk health care. I think it's no secret that the U.S. health care system is in a state of meltdown. 40 million people -- or over 13% of the US population -- now lack regular access to health care. Medicaid, a state-run program which serves another 17% of the population, is currently collapsing due to state budget collapses (only 50% of Medicaid costs are covered by the federal government). The reality is that 90 million people -- nearly THIRTY PERCENT of Americans -- will lack health insurance by the end of this year, meaning that if they get a serious illness like cancer or heart disease or are simply in a major automobile accident they will die or at the very least be utterly bankrupted, and if the swine flu really does take off, there will be bodies in the streets as has not been seen here since before World War II. This is unacceptable both from a standpoint of societal stability -- those people will *not* quietly go home to die -- and from a moral standpoint -- if every other industrialized nation can afford to provide health care to all their people, the same is certainly true of the US, killing people because of some ideological commitment to some ideal is immoral regardless of your religion, unless your religion is The Almighty Dollar in which case you're going to Hell anyhow so who cares (see: mammon, worship of). Yet costs of the U.S. health care system have gone completely out of control -- 16% of the U.S. GDP is now dedicated to health care, more than any other nation in the world. The cost of health care in the United States has become a drag on the economy that severely disadvantages us compared to international competitors who spend half as much on health care.

While the 30 percent of Americans lacking health insurance is unacceptable by any standard due to the problems of morality and social stability, the monetary cost problem might be acceptable if Americans really did get better health care. Yet they don't.
The results of all this spending is no better than nations such as France that spend half as much on health care as the US -- people don't live longer, have less access to doctors, and hospitals and emergency rooms are closing all across the nation even as the population rises, meaning that if you have an emergency you may wait for twelve hours or more to see a doctor. In much of the United States a shortage of primary care physicians now means that you may wait as much as three weeks to see one of the few physicians who will accept whatever health insurance you do have. And even having health insurance is no guarantee that you will actually receive the care you need. Health insurance companies are canceling coverage for people ill with serious illnesses using the flimsiest of excuses even for prior illnesses that the patient didn't know he had because they had never been disclosed to him by the doctor, a process called "recission" that can kill or severely maim people yet that the insurance companies have no intention of limiting to only those who intentionally defraud them. So we are basically paying 16% of U.S. GDP for health care, but we are not getting the health care we are paying for by any measure. I know of nobody who has had a serious illness within the past ten years who believes that the current system for paying for our health care is efficient or effective. Well, except for those on Medicare, Tricare, or similar programs, where both my relatives on those programs and actual surveys all say that they're quite happy with their "government health care".

So what is the solution? President Obama proposes a system that has been tried in several states and failed in all of them -- a mixed public-private system with mandates to buy insurance and subsidies for lower-income people. It has not worked because it creates an expensive bureaucracy to administer the mandates and subsidies and public insurance pool, and the private insurers use the public insurance pool as a dumping ground for the more expensive people they don't want to insure. In addition, the subsidies for lower-income people have never been sufficient to insure all the uninsured, which does not solve the problem of the uninsured. In short, it causes higher costs and no real improvement in the overall healthcare system.

As a fundamentally conservative person, repeating an approach that has never worked anytime that it has been tried offends me. Meanwhile, Republicans and some conservative Democrats propose a risky and untried system that has never been tried anywhere in the world, and where there is no guarantee that it will actually work. The problem there is that they are proposing to experiment with the health of 300 million people with an approach to funding health care that has never been tried in real life as vs. their theoretical papers. I am fundamentally opposed to gambling with the lives of 300 million people. A real conservative doesn't gamble with the lives of 300 million people, he goes with what he knows works.

So if none of those work, what else is left? A fundamentally conservative person then goes out and sees what other people have tried. So let's head off to Britain. Britain has socialized medicine -- all hospitals are owned by the government, all doctors basically work for the government, and the British health care system, well, sucks. It is very cost-effective but that's the only thing you can say about it, outcomes and access to care both suck. So socialized medicine such as practiced in Britain isn't what we want.

So let's look north to Canada. Canada has what's known as a "provincial" system. Each province is required to have a public insurer that covers the care of its citizens. The structure of this insurer and how it is funded varies from province to province. The federal government provides matching funds. Hospitals may be public or private, doctors are generally private doctors who are paid via insurance. In short, it works a lot like the Medicaid system here in the US, except with a larger number of people in it -- and with the same problems as the current Medicaid system here in the US (i.e., uneven coverage, portability issues when moving to a different province, some provinces have poorer coverage than others due to a poorer economy or ideology which drives doctors out of those provinces to provinces that pay better and thus causes long waiting lists, and so forth). So anyhow, this is better than the British system -- at least the healthcare outcomes are acceptable, as is the cost, less than half that of the US as a percentage of GDP -- but a true conservative doesn't stop at two health care systems. There's lots more out there.

So now let's look at true national singlepayer systems -- Japan, Taiwan, and France. Japan and France have had their systems for decades and had excellent results with it. In both nations there are no waiting lists, patients have ready access to the latest technologies, and the health outcomes on all measures are superb. And they do this with much lower costs than the United States, while covering everybody. For example, France spends HALF as much as the US on health care in absolute dollar terms (or if looking at GDP, 11% vs. 16% on health care, still significantly less) -- yet still manages to provide health care that on virtually all measures is the best, or near the best, in the world. The French whine about how much it costs, but the fact remains that it still costs less than U.S. healthcare -- only 11% of their paychecks go to health care, as vs. 16% of our paychecks here in the US, and the fact that it's being taken out by government rather than private insurers doesn't really matter, I don't have it in my paycheck either way. Given that, less money out of my paycheck, better results... sounds good to me.

So the next question is: Can we really transition to this? I mean, we have 30% of the population either uninsured or on Medicaid. Surely it'll cost a lot of money to get them all insured and into the system, right? And surely it'll cause a lot of waiting lists as they all go get the health care they can't afford right now, right?

So now let's look at another single-payer system: Taiwan. First of all, Taiwan is hardly a socialist country. They are capitalist to a fault, taking it to extremes that the United States never did. Taiwan's thriving capitalist economy provides most of the motherboards in most computers sold world-wide, as well as significant numbers of microchips and other important pieces of the world economy. The modern computer industry basically does not exist without Taiwan's entrepreneurial spirit, their contribution to the industry is far out of proportion to the size of their population. But in 1995, Taiwan had FORTY PERCENT of the population with no health insurance -- i.e., even more, as a proportion of the population, than here. So Taiwan bit the bullet and instituted a single-payer system in 1995 and... There was no increase in overall health care spending! Instead, because health insurance overhead was reduced from over 35% to under 2% with the new national system, healthcare spending remained stable, and while it has increased since then it is still at well under U.S. spending. And none of the bad things predicted by conservatives -- waiting lists, government bureaucrats interfering with health care, etc. -- have come true.

Finally, there are the mixed systems for funding health care such as the Swiss and Dutch systems. These are similar to Obamacare on the surface but have one important different: For-profit health insurers are banned in both nations. All health insurers are heavily regulated non-profits that might as well be branches of the government, where any profit above reserve requirements is required to be turned over to the rate-payers as rate rebates and only a certain percentage is allowed to be retained as administrative expenses. Here in the United States we have no such health insurance companies and would have to build them from scratch -- the current for-profit insurers certainly would not consent to becoming heavily regulated non-profits. My conclusion is that while there are perhaps some advantages to those systems, trying to implement one of them here in the U.S. would be difficult. We have experience, with Taiwan, of what it takes to turn a US-style system into singlepayer. We have no experience with what it takes to turn a US-style system into a Swiss/Dutch style mixed system. Indeed, the Dutch system actually started out as singlepayer and transitioned to the mixed system, implying that the only way to get to the Dutch system is to start with single-payer and go from there with an entirely new insurance industry.

Conclusion: The conservative choice -- the choice that takes the fewest risks with the health of the U.S. population -- is a transition to a Taiwanese/French style single payer system. We have a model for how to do so with Taiwan, and we have a model for how to retain consumer choice on top of the core insurance program with France (via their Medigap-style policies available from private insurers). Furthermore, we have an already-existing singlepayer health care bureaucracy -- the Medicare bureaucracy -- that could be easily expanded to serve the entire population rather than just old people. Medicare already handles 22% of the health care spending in the US, scaling it up to cover the other 78% and bringing it to modern standards of coverage (as vs. 1968 standards) would be much easier than creating a new program entirely from scratch. All other approaches either do not work, we have no blueprint for how to transition to them, or are take unacceptable chances by applying unproven programs to the health of 300 million people and thus are "conservative" only in the minds of radicals who confuse "conservative" with "complies with a specific ideological filter". Single-payer Medicare For All: time-proven, cost effective, the choice of those who are really conservative as vs. radicals out to experiment with the health of 300 million people.

5 comments:

This is a very well written and thoughtful presentation of health care alternatives.

I am so concerned that politics and power are at the heart of these debates, that we are going to end up with a government run mess.

Our government has not had a great history of running bureaucracies. On the other hand, we do need something that breaks the medical cost grip that insurance companies and the medical industry has on us.

Thanks, Bill. Yes, looking at what is currently going on in Congress with their health care proposals I can only shake my head, because it is all about special interests and the result simply won't work, we already tried it in three different states and it failed. Even the "public option" that some people mention has been tried, and failed -- the private insurers simply used it as a dumping ground for sick patients they did not want to insure and regulators lack the resources and/or will to actually enforce the anti-dumping regulations.

Even if you're okay with the health outcomes of the current system (which are mediocre) the costs are simply killing us. 16% of GDP spent on healthcare... we can't keep doing that. And spending more to add all the uninsured to Medicaid, another proposal I've seen, would make that even worse.

I did not come to the notion of federally-run singlepayer easily or without qualms, but I simply can't see any entity other than the federal government that would have the power to slap our health care industry silly and get costs down to something sustainable. Private individuals certainly don't have that power, when they need health care the industry says "you will take it at the cost we tell you, or you die." That's not exactly prime bargaining position. The states are stuck in race-to-the-bottom mentality, where a Canadian-style provincial plan run by the states won't work because the states would then drive coverage through the floor in attempts to economically out-compete their neighbors, resulting in poor care and long waiting lists. That has derailed most state efforts to rein in health care costs, people simply will not accept that and they shouldn't.

I'm under no delusion that Medicare For All would be a panacea. Our current Medicare program has some significant issues that need addressing, such as the fact that private doctors and hospitals are gaming the system and driving up costs with unnecessary procedures (see McAllen Texas). But at least we have a chance to take on the health care industry if everybody has a stake in it and can address the problems with their united power as embodied by the federal government. I doubt it would be utopia, but my mother loves her Tricare, my grandmother received excellent care via Medicare and Medicaid, all the surveys back up their experiences (i.e., most people in those programs are quite happy with their "government health care", happier than most people with private insurance), so the doom and gloom stuff simply doesn't survive the light of reality. Which is what we have to live in, unless we want to go the way of the USSR, which put ideology ahead of reality and thus went the way of the dodo bird.

Excellent post, BT. I haven't seen a clearer comparison-contrast between the different systems anywhere. And your fundamental conclusion that single-payer is the "conservative" choice is delightful, unexpected, and yet logically inarguable. I also consider myself "conservative" in many ways, but that term is, in a political sense, completely removed from its roots... the party that comes closest to representing conservatism these days is, oddly enough, the democrats.

A wonderful post - great discussion of the existing comparable medical systems.

But let's go back to the programming analogy. I one worked as a programmer for the American Board of Pediatrics. They were trying to graduate from an old System 36 to an AS/400. It should have been cake but the 36 ran Basic, and the AS/400 couldn't run it. So they had to implement a 'gateway' to pass data between the two computers, and rewrite the programs on the A/S400 in COBOL.

You can see it was a nightmare, maintaining data integrity, bringing up programs in stages, until the day we all dreamed of when we could douse the 36 in lighter fluid and have a weenie roast.

You dig it, I know. But that's a kindergarten exercise compared to pulling the plug overnight on the insurance industry and replacing it with single-payer.

We need to go single-payer, but let's do it in stages. Cover the 40 Million uninsured. Set it up so it's funded by 3 sources, payments by the policyholders according to their ability to pay, by employers who do not offer insurance and the balance subsidized by Uncle Sam.

Here's the transition to single-payer. Make the business co-pay LESS than what it is for private insurance now. Allow business to transition over voluntarily if they see the advantages of single-payer. Allow any individual the right to opt-out of single-payer and buy insurance, but don't allow anyone to be uninsured and leech off the system.

By 2030, there will be no private insurance companies and the government option won't kill anyone in the transition.

Ground rules: Comments that consist solely of insults, fact-free talking points, are off-topic, or simply spam the same argument over and over will be deleted. The penguin is the only one allowed to be an ass here. All viewpoints, however, are welcomed, even if I disagree vehemently with you.

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